In the midst of his participation in the Colombian Business Congress (CEC), of the Andi, in Medellin, Efraín Cepeda, the president of the Congress of the Republic, He assured that next week (from September 9 to 15) the financing law or new tax reform proposed by Gustavo Petro’s government would fall.
“We have enough votes to defeat tax reform next week“, said Cepeda, who added that The Government must cut 12 billion pesos from the General National Budget (PGN) project for 2025.
(See: From financing law to tax reform: the new proposal from Congress).
But what exactly is Cepeda referring to? We explain.
What the President of Congress meant
The National Government has already submitted the PGN project for 2025, which was presented with an amount of 523 billion pesos. The Executive plans that 12 billion pesos of that total will come from a tax reform, or financing law, as they have called it.
Nevertheless, The accounts do not convince Congress and there are already some proposals to protect the country’s fiscal stability.
(See: Banrep reduced the reserve requirement on deposits from credit institutions).
In a conversation with Portafolio, Cepeda himself had already explained that he had put forward to the Ministry of Finance the possibility of separating the financing law from the PGN and processing a tax reform in 2025.
“It is a proposal signed by a plural number of congressmen that goes in that direction, because I believe that it is not responsible to the country, nor is it responsible to the Congress of the Republic, to approve a tax reform blindly (…) A tax reform is a matter of great responsibility for us and to include 12 billion pesos there without knowing what will be approved or what will not be approved when it is presented. I have said that the responsible thing is that we discuss the general budget of the Nation 2025 without those 12 billion pesos, then we discuss the tax reform separately and what comes out of there is done in an additional budget, as was done with the previous tax reform.“, the congressman explained.
(See: Colombian investment abroad soars by 80%).
In other words, Cepeda’s position with the Government is that 12 billion pesos be cut from the 2025 PGN before Tuesday, September 10, so that it remains at 511 billion pesos, or the amount of 523 billion pesos will be denied.
It should be remembered that there is already a proposal signed by 30 congressmen to reduce the budget by 12 billion pesos.
The Congress also has until next Friday, September 15 to approve the amount of the Budget, which will be the basis for discussing the same project.
(See: Colombia’s GDP for the second quarter of 2024 grew by 2.1%).
Tax reform.
What does Andi say about tax reform?
Bruce Mac Master, president of the National Association of Industrialists (Andi), He also spoke during the CEC about the financing law and noted that The proposal could increase unemployment by 0.38 percentage points (pps) and decrease the investment rate by almost 2%.
“At this time we have no doubt that the best tax reform is greater economic growth and reduced spending. This is the largest generator of resources for the State. As this reform is in place, it would have effects on unemployment, informality and economic activity.“, said Mac Master.
(See: Colombia, among countries that would have the least economic growth in 2024, according to ECLAC).
Regarding the 12 billion pesos that are missing from the PGN and that the Government seeks to fill with its financing law, Mac Master stated that this will only be achieved if there is greater economic growth, backed by physical security, energy security and legal security
“In terms of physical security, there are several regions that are seriously threatened in terms of public order. The State cannot give up territorial control under any circumstances. Energy security is a great challenge, since we have made many efforts to guarantee autonomy and self-sufficiency, and we had a significant energy buffer, but today we are using the entire system at full speed. And that creates uncertainty. When one makes an energy projection, one realizes that we are walking on a razor’s edge.“, Mac Master highlighted.
Bruce Mac Master, president of Andi.
PORTFOLIO
